Japan's Kioxia forecasts 31-fold jump in Q3 net profit, but falls short of market expectations

[Financial News, Tokyo = Reporter Seo Hye-jin] Kioxia Holdings Corporation, a Japanese semiconductor company, said on the 31st that its net profit for July-September this year is expected to surge 31 times from a year earlier to 1.27 trillion yen, or about 11.39 trillion won, supported by expanding investment in Artificial Intelligence (AI) data centers. Even so, the result fell slightly short of market expectations, despite reaching a record high, underscoring the elevated bar for AI memory demand.
According to Nikkei and other media outlets, KIOXIA Corporation announced that its consolidated net profit for April-June this year rose 46 times from a year earlier to 842.1 billion yen, or about 755 billion won. That was slightly below the company's forecast of 869 billion yen, or about 779 billion won, and the market estimate of 968.7 billion yen, or about 869 billion won.
The company said it expects net profit for July-September to rise 31-fold from a year earlier to 1.27 trillion yen, or about 1.139 trillion won. That also came in slightly below the market forecast of 1.3431 trillion yen, or about 1.205 trillion won.■ Record results driven by AI data centersThe strong earnings were driven by rising demand for NAND Flash Memory used in AI data centers. Revenue from data center customers in April-June reached 1.1747 trillion yen, or about 1.054 trillion won, more than five times higher than a year earlier. In just one quarter, that was roughly equal to the company's annual data center-related sales last year.
As demand continued to outpace supply, the average selling price of NAND rose by about 70% from the previous quarter, while shipments increased only in the low single digits. In other words, price gains, rather than volume growth, drove the improvement in earnings.
The SSD and data storage businesses accounted for about 66% of total sales. More than 60% of that came from data center and enterprise SSDs, and shipments in those segments also hit a record high, supported by expanded investment in AI servers.
The company said it expects memory demand to continue exceeding supply next year as AI infrastructure investment expands. With U.S. tech giants such as Amazon, Meta Platforms, and Microsoft recently announcing plans to increase AI capital spending, demand for enterprise SSDs is also expected to remain solid for the time being.
Its financial structure also improved markedly. After shedding the burden of interest-bearing debt that had exceeded 1 trillion yen before its listing, the company turned to net cash of 186.7 billion yen, or about 168 billion won, in April-June this year.
Operating cash flow rose to 866.3 billion yen, or about 777 billion won, nearly three times the previous quarter, and the company fully repaid 407.5 billion yen, or about 366 billion won, in borrowings. It also booked 50 billion yen, or about 45 billion won, in annual special bonus costs to share the benefits of its improved performance with employees.■ 800 billion yen share buyback, with stronger shareholder returnsKIOXIA also unveiled measures to expand shareholder returns. It decided to buy back up to 800 billion yen, or about 718 billion won, worth of shares and carry out a 3-for-1 stock split effective Oct. 1. The buyback will cover up to 30 million shares, or 5.5% of outstanding shares excluding treasury stock.
The company also plans to expand long-term supply agreements, especially with AI data center customers, and aims to raise the share of contracts with major clients to around half by 2028.
Investor sentiment improved as expectations for a better AI memory market coincided with the company's large-scale shareholder return policy.
On the Tokyo Stock Exchange, Kioxia's share price closed at 46,500 yen, up 17.72% from the previous trading day. Buying interest remained strong through the close, with the stock staying at the upper limit of its daily price range.
As the Philadelphia Semiconductor Index (SOX) in the United States surged and expectations for expanded AI investment spread across the semiconductor sector, major chip stocks such as Tokyo Electron and Advantest Corporation also posted gains.
The Nikkei 225 Average closed at 64,362.02, up 2,494.59 points, or 4.03%, from the previous trading day.
Market watchers said the results once again confirmed the benefits of the AI memory supercycle. Still, they noted that the stock's future direction will depend less on the absolute size of earnings and more on how long the memory boom tied to AI investment can last, and whether the company can continue to deliver results that exceed elevated market expectations.

[email protected] Seo Hye-jin Reporter